By Pam Martens: August 25, 2014 The time and effort spent by members of the Federal Reserve Board of Governors debating the timing of rate hikes is an utterly wasted exercise in futility – and the historically astute members of the Fed know it. After eight solid months of blathering about when rate hikes might occur, the real muscle in the bond market – the bond vigilantes – are drawing their own conclusions about what is coming down the pike. The benchmark 10-year U.S. Treasury note has moved from a yield of 2.85 percent at the beginning of the year to close last week at 2.38 percent. That’s the reaction of a market more worried about constrained income dispersal in the U.S. causing deflation than a market bidding up yields in anticipation of a rate hike. In early August, the Fed’s own scholars released a report showing just how fragile … Continue reading →

By Pam Martens and Russ Martens: August 21, 2014 Any ideas that household balance sheets in the U.S. have been repaired since Wall Street took a wrecking ball to the nation’s economy in 2008 were dashed with the release of a study earlier this month by the Federal Reserve. As Federal Reserve Chair Janet Yellen ponders what will happen in the markets when the Fed starts to eventually raise interest rates, she has to also worry about what will happen to the cash-strapped consumer who is barely hanging on and has no emergency funds to meet a job loss or hike in credit card interest payments. The Fed study was conducted in September 2013 by the Fed’s Division of Consumer and Community Affairs. Its stated aim was to “capture a snapshot of the financial and economic well-being of U.S. households, as well as to monitor their recovery from the recent … Continue reading →

By Pam Martens and Russ Martens: August 20, 2014 According to the Oxford Dictionary, the word cartel can mean either businesses that seek to restrict competition or a coalition “intended to promote a mutual interest.” Under at least the second definition, the Federal Reserve Bank of New York, a key regulator of the biggest Wall Street banks’ holding companies, has been sponsoring (yes, sponsoring) a cartel for decades. To grasp the sheer insanity of what the New York Fed is doing, imagine going to the Securities and Exchange Commission’s web site (another Wall Street regulator) and finding that it has loaned out its web site and its imprimatur to multiple Wall Street cartels writing their own rules of conduct. It sounds Orwellian doesn’t it. And yet this is the web site address for the New York Fed-sponsored Foreign Exchange Committee: http://www.newyorkfed.org/fxc/ which has been operating for the past 36 years … Continue reading →

By Pam Martens and Russ Martens: August 19, 2014 Two weeks ago, Paul Krugman used some expensive media real estate to write a propaganda piece on the unsupportable proposition that the Dodd-Frank financial reform legislation passed in 2010 is “a success story” and that its bank wind-down program known as Ordinary Liquidation Authority has put an end to “bailing out the bankers.” Wall Street On Parade took Krugman to task over this fanciful ode to accomplishments by the President the day after his piece ran in the New York Times’ opinion pages and suggested he do proper research on this subject before opining in the future. That was the morning of August 5. By late in the afternoon of August 5, Krugman had a reality smack-down on his Dodd-Frank success fairy tale by two Federal regulators. Every major media outlet was running with the news that eleven of the biggest … Continue reading →

By Pam Martens: August 18, 2014 On May 5, 2014, Irving Picard, the court-appointed trustee in charge of finding and distributing Madoff’s swindled funds to investors released this statement in a press release announcing the fourth interim distribution of funds to victims: “…1,129 accounts will be fully satisfied following the fourth interim distribution. All allowed claims totaling $925,000 or less will be fully satisfied after the distribution.” Just eight days later, Richard Breeden, the Special Master that’s working on behalf of the U.S. Department of Justice to distribute a separate pool of funds to Madoff’s victims reported that more than 36,000 claimants have filed documents with his office indicating that they haven’t yet received a dime of restitution. Yes, 36,000 people from all over the globe. That’s bad enough but the story goes downhill from there. Almost six years from the date that Bernard Madoff turned himself in as the … Continue reading →

By Pam Martens and Russ Martens: August 14, 2014 In response to a Freedom of Information Act (FOIA) request from Wall Street On Parade seeking information on how Citadel’s dark pool, Apogee, operates, the Securities and Exchange Commission responded in a letter dated August 12, 2014 that “we have determined to withhold records responsive to your request….” Dark pools are the unregulated stock exchanges currently under scrutiny for potentially illegal market rigging activities. We were not asking for trade secrets or results of examinations. We simply wanted basic information on how the Apogee dark pool operates in the marketplace. Mary Jo White, Chair of the SEC, has promised greater transparency by her agency, and yet, this very basic level of information was denied. Other dark pools like Liquidnet, Credit Suisse Crossfinder, and even the mighty Goldman Sachs’ dark pool, Sigma-X, have released their Form ATS describing the operations of their … Continue reading →

By Pam Martens and Russ Martens: August 13, 2014 Helen Davis Chaitman is a nationally recognized litigator and author of The Law of Lender Liability. And she is two other things as well – a Bernie Madoff victim who lost a large part of her life savings to his Ponzi scheme and the tenacious lawyer who represented other victims of his fraud in district and appellate courts.  Now, together with attorney Lance Gotthoffer, Chaitman has written a book titled JPMadoff: The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook. The book is being made available to readers on a new web site which will provide a chapter each month. The first chapter is currently available and Chaitman says that the second chapter, to be posted on September 12, will detail what JPMorgan knew and when it knew it.  The web site also provides a quick means of contacting your … Continue reading →

By Pam Martens and Russ Martens: August 12, 2014 Tax lawyers do not typically blow the whistle on their corporate employers because that law degree cost them (or their parents) a serious amount of money; the degree will result in outsized lifetime earnings; and, most importantly, because it is career suicide. Even when the tax lawyer may believe there is fraud that would trump the attorney-client privilege, whistle blowing in a court of law against one’s employer is a rarity for a tax lawyer. So one must seriously ask what would motivate David Danon, a 1998 magna cum laude graduate of Fordham University School of Law who proceeded to work at top tier corporate law firms (where he obviously saw a lot of questionable tax deals) to blow the whistle on the gold standard of the mutual fund industry, the Vanguard Group, Inc. In making his claims, Danon is also … Continue reading →

By Pam Martens: August 11, 2014 Meet the new, slimmed down, less complex, more manageable Citigroup. Or not. Figuring out what Citigroup owns and what it has sold is getting harder by the day as a vast number of its subsidiaries in the 160 countries in which it operates have up and vanished from its public filings but do not actually appear to have been sold in many cases. One can understand why the global bank’s Federal regulators have thrown up their hands in despair and sent it back to the drawing board on its capital plans and so-called “living will” measures to unwind itself should its future insolvency threaten the financial system as it did in 2008. According to Citigroup’s annual 10K filing with the Securities and Exchange Commission, the number of Citigroup’s subsidiaries have shrunk by a whopping 91.8 percent since December 31, 2008. Or not. Take the … Continue reading →

By Pam Martens and Russ Martens: August 7, 2014 The U.S. Senate has been holding hearings since June which show a clear rethinking on what type of legislation it must enact going forward to achieve meaningful reforms of Wall Street and protect the economy from its excesses. The 849-page Dodd-Frank financial reform legislation, enacted four years ago in 2010, mandated 398 new rules; just 208 of those rules, or 52 percent, have been enacted and none of them seem to be reining in excesses on Wall Street. To understand why Dodd-Frank has been such a failure in reforming Wall Street conduct, one need only read the following sentence and think about it for a moment: Public Law 73-66, 73d Congress, H.R. 5661: An Act to provide for the safer and more effective use of the assets of banks, to regulate interbank control, to prevent the undue diversion of funds into … Continue reading →